Board of Northeast Research Lab Severs Ties to Sister Group

One of the nation's largest federally funded education research
laboratories has quietly voted to cut its ties to its sister
organization and to accept the resignation of its executive
director.

Last month's action by the board of the Regional Laboratory for
Educational Improvement of the Northeast and Islands was aimed at
ending years of growing turmoil at the lab, which has a $5
million-a-year federal contract to provide research assistance to seven
states, as well as Puerto Rico and the Virgin Islands.

Almost since its founding in 1985, questions have been raised about
the lab's close links to The Network, a private, nonprofit research
group that has served as the lab's fiscal agent.

Both organizations were founded and led by David P. Crandall, who
was the lab's executive director until its Aug. 11 board meeting, and
they shared office space in Andover, Mass. Critics contended that the
relationship posed a potential conflict of interest because the two
entities might compete for the same contracts.

Such concerns heightened in 1989 after federal investigators audited
The Network and claimed that hundreds of thousands of dollars had been
improperly charged to the government.

The questionable practices they cited included an arrangement in
which Mr. Crandall bought the building where both organizations were
headquartered and then leased it back to them, the lease and purchase
of a Porsche automobile for Mr. Crandall's use, and an arrangement in
which the organizations leased computers and other office equipment
from a firm headed by Mr. Crandall's wife.

The Network disputed the audit report, which covered five years
beginning in 1983. But in February, it settled out of court with the
Education Department, agreeing to pay back $225,000.

Jockeying for Position

And lingering dissatisfaction over the settlement, the
organization's continued ties to The Network, and concerns about the
focus of the lab's work led last spring to the defection of two of the
lab's most prominent board members--Thomas Sobol, New York State's
education commissioner, and Vincent L. Ferrandino, who, until recently,
was Connecticut's commissioner of education.

"I think we had gotten to the point of recognizing that, for
whatever reasons, there were sufficient numbers of people who were not
happy with the current situation," said Susan S. Ellis, the Connecticut
school administrator who heads the lab's board. "The health of the lab
depended on a very clear statement that the lab had to be independent
and running its own show."

Board members also reasoned that the separation would put the lab in
a more favorable position when it bids next year to renew its federal
contract. Already, a group at Brown University has indicated that it
will compete for the contract.

The situation was further clouded earlier this year by a new law
that authorizes the establishment of two new education-research
laboratories; the law did not specify where they will be located.

Indeed, lab officials and some observers said the upheaval at the
two organizations has had as much to do with politics as it has with
concerns over management.

"My sense is that there's a lot of jockeying for the next
competition, and people don't like Crandall and want to make him look
as bad as possible," said Braden Goetz, the legislative counsel on the
House subcommittee on select education, which oversees the federal
education-research laboratories.

As for the audit, current and former lab officials said that, while
The Network's financial arrangements may have appeared improper, their
intentions all along were to save money. The Porsche, they said, cost
no more to lease than other, less exotic, four-door vehicles.

Charges Disputed

"Providing cars to corporate heads is pretty standard, including in
the nonprofit world," Mr. Crandall said.

And the sale and lease-back of the office building were arranged to
help a financial bind at The Network, officials said. The federal
government does not allow its funds to be used for mortgage costs, but
it does allow for rent payments. Moreover, Mr. Crandall said, it would
have cost the organization $100,000 to move.

But the government does not allow contractors to deduct for rental
costs in sale-and-lease-back arrangements unless the rent is equal to
the amount the organization would have paid had it continued to own the
building.

The board's own review of the audit determined that all of the
disputed arrangements, made on the advice of lawyers, had been proper.
They chose to settle the matter anyway, after years of fighting it, in
order to wipe the slate clean in preparation for the upcoming
competition.

But the settlement did not close the book on these issues. Mr.
Ferrandino, Mr. Sobol, and other board members said the lab's financial
share in the settlement was unfair because the years covered by the
audit included a period of time predating the lab's existence.

Board members also questioned the length of the payback period,
which goes beyond the lab's current contract.

"These administrative and management difficulties could perhaps be
more readily surmounted if the laboratory were making an important
contribution to the education-reform efforts under way through the
region," Mr. Sobol wrote in his April letter of resignation.
"Unhappily, that is not the case."

Changing Focus

Observers inside and outside the lab agree that some of the
criticism that has been heaped on the organization stems from
dissatisfaction on the part of state education officials who wanted the
lab to meet their states' specific needs. But the lab, which serves a
diverse mixture of states and territories, construed its mission more
broadly.

It created a regional teaching credential to allow teachers to
easily move from state to state and is working to do the same for
administrators and special educators. The lab also worked with
individual schools across the region to assist them in their reform
efforts.

But lab officials said last week that they planned to take a new
tack now that the Goals 2000: Educate America Act has signaled a new
federal emphasis on state-level school reform.

"We now know we need to rethink what we do over the next five
years," Ms. Ellis said. "We need to be tied into state-level reform
initiatives."

Under the new administrative arrangement, lab officials said, the
lab's mission will be made clearer and more distinct from that of The
Network.

Mr. Crandall, who observers said lacked the political and managerial
savvy for his lab post, will continue to head The Network. Although it
is the smaller of the two organizations, The Network is a more
entrepreneurial organization with a broader mission. Observers inside
and outside the organization, including Mr. Crandall himself, said that
group is better suited to his strengths.

"It was difficult. It was strained, and it was hard, but it was
amicable," said Phyllis Field, a board member from Rhode Island. "But
now both agencies can operate at their full potential."

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